Starter:

What problems might beencountered in trying to

industrialise Russia?

Economic Development under Alexander III

Lesson Objectives:

1) To identify reasons why Russia needed to industrialise

2) Examine the policies pursued by Witte.

3) To begin to assess the successes of both Witte and Stolypin.

WHY DID RUSSIA NEED TO INDUSTRIALISE?

The transformation of the Russian economy had begun in the reign of Alexander II in response to the humiliation of defeat in the Crimean War.

Alexander III was well aware that economic modernisation was also needed to allow Russia to support her growing population and to recapture her Great Power Status. At the start of Alexander III’s reign Russia relied on the export of grain to earn her money, but crop yields were low because of problems with emancipation.

The countries economy was also heavily dependent on the weather and in 1891 – 1892 famine affected 17 of Russia’s 39 provinces – the government failed to organise adequate relief and over 350,000 died from starvation.Alexander also needed to see economic development to support the growth of his military (50% 0f government spending) and to protect the Empire.

A railway building programme had started and there was some small-scale development of factories. However, by 1881, Russia’s economic development still lagged far behind that of Western Europe and there was a huge gulf between Russia’s potential, given its vast supplies of natural resources and manpower, and the country’s actual levels of achievement.

It was not until the reign of Alexander that a real ‘industrial revolution’ took off.

Alexander’s reign is remembered for its reactionary policies, but it must be remembered that it also saw the start of a period of great industrial expansion.

The Tsars had avoided industrial expansion, as it was seen to be “dirty” and “western” compared to Russia’s traditional agricultural economy. However, the 1890s saw the onset of a period of rapid industrial growth, which came to be known as “the great spurt”. This was a period of sudden expansion, which was initiated by private enterprise, but sustained by deliberate government policy.

Two man in particular were responsible for this industrial reform, Finance Ministers Vyshnegradsky (1887 – 1892) and Witte (1892 – 1903)– both of whom adopted similar policies – improving the Russian economy by increasing indirect taxes, negotiating loans, reducing imports and expanding exports, particularly of grain. A Tariff Act introduced in 1891 protected Russian iron, industrial machinery and raw cotton.

The Famine of 1891 – 1892 resulted in Vyshnegradsky being sacked but Witte continued the work.

The ‘Great Spurt’

Tsarist economic policies dominated by 2 men;

Witte Stolypin

Witte was Minister of Finance (1893-1903 – during both the reign of Alexander III and Nicholas II). He concentrated on expanding Russian industry.

Stolypin was president of Council of Ministers (1906-11 – during the reign of Nicholas II). He focussed on improving Russian agriculture. We will look at Stolypin in greater detail in a few lessons time

Task 1

• Use the extract from Lynch (p 21- 26) and the handout to make your own notes on Witte.

• Use the subheadings and questions to help you.

Witte – background and objectivesSergei Witte Witte was the minister for finance between 1893 and 1903. He was unusual because he was not aristocratic, but had gained a position of great influence, and his aim was to re-invigorate autocracy through reform. Economic development would, he believed, provide employment and raise standards of living, so curbing revolutionary activity. Witte’s objectives He wanted to abandon liberal economics, in favour of state intervention. Traditionally, the Russian government had adhered to the policy of “Laissez-Faire”. This meant that the government deliberately played no part in economic matters, believing it to be the preserve of private enterprise. Witte aimed to improve Russia’s industrial capacity through deliberate government policy.

Witte’s methods However, Witte used state power to direct and control the economy, which is known as state capitalism. He was impressed with the industrial revolutions, which had occurred in Western Europe, and hoped to expand Russia’s economy along western lines. This would require investment on a large scale.

He invited a large number of western managers and experts to advise and organise new initiatives.

Most importantly, he encouraged investment from western capitalists, into Russian industry, to encourage growth. (One key aim was to make Russia less like a “colony” which was flooded with foreign imports, and did not produce goods itself).

To get capital which could be invested in Russia’s industries, Witte took a number of steps:

1. He arranged sizeable loans from abroad. 2. Heavy taxes and high interest rates were imposed at

home. 3. Foreign investment was allowed to flow into Russia. 4. Imports were halted through high tariffs, thus allowing

Russia’s growing industries a secure market.

Witte – ResultsAs can be observed in the data below, there was a good deal of success through Witte’s policies. Foreign Investment 1880 - 1914

YEAR Foreign Investment in millions of roubles 1880 98 1890 215 1895 911 1914 2,000

The Russian Economy: annual production in millions of tonnes

Coal Pig I ron Oil 1880 3.2 0.42 0.5 1890 5.9 0.89 3.9 1900 16.1 2.66 10.2 1910 26.8 2.99 9.4 1913 35.4 4.12 9.1 1916 33.8 3.72 9.7

By 1900, 40% of Industry in Russia had been founded after 1891, and through the 1890’s, Russia’s industrial growth stood at 8%, the highest level in the world. (Though overall Russia was still well behind).

Witte - RailwaysMuch of the foreign capital, which came into Russia, was invested into the growing railways, which had been neglected, as the Tsars saw them as a western idea, which could harm the empire. Witte felt that by expanding the railways, this would have a knock on effect on other industries, like coal and iron. Russia’s rail network did start to expand rapidly. Growth of Russian railways (km’s)

1881 1891 1900 1913 21,228 31,219 53,234 70,156

The showpiece of Russia’s rail expansion was the Trans-Siberian railway, (started in 1891, finished 1902) which linked the western and eastern parts of the empire, and opened China for exploitation. However, this was more of a symbol of Russia’s expansion than a project of real economic value.

Criticism of WitteCriticisms of Witte’s policies

1. Tariffs meant that goods were expensive, and most people could not afford what was being produced.

2. This “spurt” was part of a worldwide boom. 3. The growth of the proletariat (working class) in the main cities

was not planned, and this led to social problems, and appalling work, and living conditions.

4. The pan Slav thinkers resented the foreign involvement. 5. Most significantly, Witte made no attempt to rectify Russia’s

agricultural problems. Production of grain was stagnant, while the population rose, causing suffering and famine.

Note: The First World War caused the economic “spurt” to come to an end, and the revolutions of 1917 caused further harm to the Russian economy.

Homework

Explain why Witte wanted to promote industrialisation in

Russia in the 1890s. (12)

Complete for next lesson.

We will self-mark using green pen and mark scheme at the start of next lesson.

Plenary

1)Who was Minister of Finance from 1893-1903?2)Give one reason why Witte wanted to industrialise.3)What was state capitalism?4)Name one policy of state capitalism.5)Where did the Trans-Siberian railway start and finish?6)What did Witte’s policies make Russia dependent on?7)What saw huge growth as part of a transport “revolution”?8)Give one reason why strikes increased?